What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-02-27 · 175 added, 136 removed, 379 unchanged (45% of the section changed)

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In addition, we provide air transportation under fixed fee flight arrangements.

Our developed nation-wide route network, pricing philosophy, direct distribution, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.

In connection with our leisure travel focus, we are completing the construction of our Sunseeker Resort in Southwest Florida, which we expect to open in late 2023.

Below is a brief description of the travel services and products we provide to our customers:

Our developed nation-wide route network, pricing philosophy, direct distribution, award-winning loyalty programs, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.

In connection with our leisure travel focus, we opened Sunseeker Resort Charlotte Harbor on December 15, 2023.

The resort has 785 guestrooms (including suites) and 20 curated food and beverage outlets.

Below is a brief description of the travel services and products we provide to our airline customers:

Scheduled service air transportation.

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As of that date, we were selling travel on 555 routes to 124 cities.

Of these routes, 428 of them are unique routes which do not have any current nonstop competition.

In this document, references to "Airbus A320 series aircraft" are intended to describe both Airbus A319 and A320 aircraft.

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These optional air-related services and products include baggage fees, advance seat assignments, our own travel protection product, change fees, use of our call center for purchases, priority boarding, a customer convenience fee, food and beverage purchases on board, and other air-related services.

The revenue for ancillary air-related products and services is reflected in the passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from our co-branded Allegiant credit card and our non-card loyalty program.

The revenue for ancillary air-related products and services is reflected in the passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from our co-brand Allegiant credit card and our non-card loyalty program.

Third party products and services.

We offer third party travel products such as hotel rooms and ground transportation (rental cars and hotel shuttle products) for sale to our passengers.

The marketing component of revenue related to our co-branded credit card is also included in this category.

The marketing component of revenue related to our co-brand credit card is also included in this category.

Fixed fee contract air transportation.

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We have coined this next stage of our Company strategy as "Allegiant 2.0" which includes the following Company goals:

– maintaining our foundation of providing affordably accessible air travel while refining and strengthening our air travel product;

• maintaining our foundation of providing affordably accessible all-nonstop air travel while refining and strengthening our air travel product;

• expanding our already broad domestic network as we have identified more than 1,400 incremental routes of which approximately 77 percent currently have no nonstop service;

– seeking to offer (subject to government approval) transborder international scheduled service into Mexico through our partnership with VivaAerobus;

– utilizing our customer data to capture accretive, asset-light direct-to-consumer revenue opportunities;

• expanding our travel company focus and offerings with the operation of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort");

• seeking to offer (subject to government approval) transborder international scheduled service to premier beach destinations in Mexico through our partnership with VivaAerobus;

• utilizing our customer data to capture accretive, asset-light direct-to-consumer revenue opportunities by offering vacation packages that include hotel stay and car rental;

• transforming our eCommerce strategy to create a frictionless experience for our customers and drive increased air ancillary and third party revenue generation;

– expanding our co-branded credit card program and our non-card loyalty program;

– expanding our travel company focus and offerings with the construction of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") (expected to open in late 2023).

– refining our marketing investment dollars by entering into dynamic agreements, such as the naming rights agreement with the Raiders of the National Football League for Allegiant Stadium in Las Vegas

• expanding our award-winning co-brand credit card program and our non-card loyalty program;

• maximizing return from our marketing investment dollars by entering into dynamic agreements, such as the naming rights agreement with the Raiders of the National Football League for Allegiant Stadium in Las Vegas

Our principal executive offices are located at 1201 N.

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Our website address is included in this document for reference only.

Our annual report, quarterly reports, current reports and amendments to those reports are made available free of charge through the investor relations section on our website as soon as reasonably practicable after electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

Our annual report, quarterly reports, current reports and amendments to those reports are

made available free of charge through the investor relations section on our website as soon as reasonably practicable after electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

Unique Business Model

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This strategy allows us to generate additional passenger revenues from our customers' decisions to purchase these ancillary products.

We have established a broad route network with a national footprint, providing service on 571 routes between 93 origination cities and 32 leisure destinations, and serving 42 states as of February 1, 2023.

As of this same date, we were selling 573 routes.

We have established a broad route network with a national footprint.

As of February 1, 2024, we serve 543 active routes between 90 origination cities and 33 leisure destinations in 42 states, and as of that date, we had announced 12 new routes scheduled to begin service in 2024.

In most of these cities, we provide service to more than one of our leisure destinations which are offered either on a year-round or seasonal basis.

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We have increased revenue related to these ancillary items from $5.87 per passenger in 2004 to $72.90 per passenger in 2023.

We own and manage our own eCommerce platform, which gives us the ability to modify our system to enhance third party product offerings

based on specific needs.

We own and manage our own eCommerce platform, which gives us the ability to modify our system to enhance third party product offerings based on specific needs.

We believe the control of our automation systems has allowed us to be innovators in the industry by providing our customers with a variety of different travel services and products, and allowing us to seek to increase revenues through testing of alternative revenue management approaches.

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This is enabled by our highly variable cost structure which allows us to increase capacity in high demand periods.

This has resulted in our being able to generate as much as 60 percent of our operating income in the peak periods of March, summer (June and July) and the holiday seasons.

This has resulted in our being able to generate a disporportionate portion of our operating income in the peak periods including March, summer (June and July) and the holiday seasons.

Our core business model manages seat capacity by increased utilization of our aircraft during periods of high leisure demand and decreased utilization in low leisure demand periods.

By way of illustration, in 2022, during our peak demand period in July, we averaged 8.2 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 4.7 system block hours per aircraft per day.

By way of illustration, in 2023, during our peak demand period in July, we averaged 7.4 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 4.5 system block hours per aircraft per day, which is almost 40 percent less than the average system block hours in July.

Our management of seat capacity also includes changes in weekly frequency of certain markets based on identified peak and off-peak travel demand throughout the year.

Unlike other carriers which provide a fairly consistent number of flights every day of the week, we manage our capacity with a goal of being profitable on each route.

Unlike other carriers which typically provide a fairly consistent number of flights every day of the week, we manage our capacity with a goal of being profitable on each route.

We do this by flying only on days with sufficient market demand.

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Conversely, during periods of lower fuel costs, we will increase flying in off peak periods as marginally profitable flights will become more profitable with lower fuel costs.

Our strong revenue production from ancillary items, coupled with our ability to rapidly adjust capacity, has allowed us to consistently operate profitably and in many cases, produce industry leading margins in challenging macro environments, including periods of high fuel prices, economic recession and a pandemic.

Our strong revenue production from ancillary items, coupled with our ability to rapidly adjust capacity, has allowed us to consistently operate profitably and in many cases, produce among the industry leading margins in challenging macro environments, including periods of high fuel prices, economic recession and a pandemic.

Low cost structure

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Delta Air Lines, American Airlines, United Airlines, Southwest Airlines, JetBlue Airways, Alaska Airlines, Hawaiian Airlines, Spirit Airlines, Frontier Airlines and Sun Country Airlines (which we refer to as the "Industry").

Our airline operating CASM, excluding fuel (that is, excluding Sunseeker) was 7.33 ¢ in 2022, which was 25.0 percent lower than the Industry average of 9.77 ¢ for 2022.

Our airline operating CASM, excluding fuel, special charges, and Sunseeker Resort) was 8.12 ¢ in 2023, which we believe is significantly lower than the Industry average.

We continue to focus on maintaining low operating costs through the following tactics and strategies:

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Throughout our history, we have primarily purchased used aircraft with meaningful remaining useful lives, at reduced prices.

As of February 1, 2023, our operating fleet consists of 122 Airbus A320 series aircraft, of which 109 were acquired used.

In December 2021, we opportunistically negotiated an agreement with The Boeing Company to purchase 50 newly manufactured 737MAX aircraft scheduled to be delivered in 2023 to 2025 with options to purchase an additional 50 737MAX aircraft.

We believe this new aircraft purchase is complimentary with our low cost strategy.

As of February 1, 2024, our operating fleet consists of 126 Airbus A320 series aircraft, of which 113 were acquired used and 13 were acquired new.

In December 2021, we opportunistically negotiated an agreement with The Boeing Company to purchase 50 newly manufactured 737MAX aircraft with options to purchase additional 737MAX aircraft.

We amended this agreement in 2023 with revised terms that now provide us with options to purchase up to an additional 80 737MAX aircraft.

Under our contract with Boeing, deliveries of the initial 50 aircraft are expected between 2024 and 2025, but will likely be impacted by recent events affecting Boeing quality assurance and the certification process for the 737MAX-7 aircraft.

See Item 1A – Risk Factors - " Regulatory review of Boeing's operations could delay its production schedule, which could impact us as any delivery delays may result in lower profitability than expected and delayed growth as well as bad publicity and other consequences." We believe this new aircraft purchase will be complementary with our low cost strategy.

Our intent to retain ownership of the aircraft, coupled with the longer useful life for depreciation purposes should result in similar ownership expense when compared with a used aircraft in our fleet.

In addition, the expected fuel savings, improved operational reliability, and other savings expected from the use of these new aircraft should aid in improving our overall low cost structure.

In addition, the expected fuel savings, improved operational reliability, and other savings expected from the use of these new aircraft should aid in improving our overall low cost structure, and the lower cost of operating this aircraft is expected to allow us to profitably add new service or routes.

We expect to continue to acquire used aircraft as necessary to support planned growth and aircraft retirements.

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We do not sell our product through outside sales channels, thus avoiding the fees charged by travel websites (Expedia, Orbitz or Travelocity) and traditional global distribution systems (“GDS”) (Sabre or Worldspan).

Our customers can only purchase travel at our airport ticket counters or, for a fee, on our website or through our telephone reservation center.

The purchase of travel through our website is the least expensive form of distribution for us and accounted for 96.0 percent of our scheduled service revenue during 2022.

We are a data driven organization.

Our customers can only purchase air travel at our airport ticket counters or, for a fee, on our website or through our telephone reservation center.

The purchase of air travel through our website is the least expensive form of distribution for us and accounted for 95.8 percent of our scheduled service revenue during 2023.

As an organization, we strive to always use data to make informed, fact-based decisions.

We are continuing to focus on capturing data to identify trends and patterns in an effort to gain efficiencies and decrease costs.

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In addition, our direct to consumer distribution method results in enhanced data which helps us deepen our relationship with our customers and increase sales.

Highly productive workforce.

Our high level of employee productivity is due to our cost-driven scheduling, fewer unproductive labor work rules, and the effective use of automation and part-time employees.

In an effort to control costs, we outsource major maintenance, stations and other functions to reliable third party service providers.

Simple product.

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Ancillary product offerings

We believe many leisure travelers are concerned primarily with purchasing air travel at the least expensive price.

We believe leisure travelers are generally more price-sensitive than other travelers.

As such, we offer the unbundling of the air transportation product by charging fees for services many U.S.

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Financial position

As of December 31, 2022, we had $1.02 billion of unrestricted cash, cash equivalents and investment securities, and total debt and finance lease obligations (net of related costs) of $2.10 billion.

As of December 31, 2023, we had $870.7 million of unrestricted cash, cash equivalents and investment securities, and total debt and finance lease obligations (net of related costs) of $2.26 billion.

We had net debt (total debt and finance lease obligations less cash, cash equivalents and investment securities) of $1.39 billion as of December 31, 2023.

As of February 1, 2023, we have $275.0 million of undrawn capacity under revolving credit facilities plus another $169.7 million of undrawn capacity under our pre-delivery payment (PDP) financing facility .

Our financial position and discipline regarding use of capital allow us to have greater financial flexibility to grow our business and to efficiently and effectively adapt to changing economic conditions.

As of February 1, 2024, we have $275.0 million of undrawn capacity under revolving credit facilities plus another $25.1 million of undrawn capacity under our PDP (pre-delivery payments) facilities.

Routes and schedules

Our current scheduled air service (including seasonal service) predominantly consists of limited frequency, nonstop flights into leisure destinations from under-served cities across the continental United States.

The scheduled service routes we are selling as of February 1, 2023 are summarized below (includes 571 routes we are currently serving, and two new announced routes on which will begin service in 2023):

Routes to Orlando 67

The scheduled service routes as of February 1, 2024 are summarized below (includes 543 active routes, and 12 newly announced routes as of February 1, 2024, which will begin service in 2024):

Routes to Orlando (MCO & SFB)

Routes to Las Vegas 61

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Routes to Punta Gorda 49

Routes to Phoenix 50

Routes to Phoenix (AZA & PHX)

Routes to Destin 31

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Core to Allegiant’s business model is our direct-to-customer distribution.

In lieu of the GDS distribution points used by most airlines, allegiant.com is our primary distribution method.

In lieu of the Global Distribution System (GDS) distribution points used by most airlines, allegiant.com is our primary distribution method.

This low-cost strategy results in significant cost savings by avoiding fees associated with GDS.

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We can more surgically match our digital advertising dollars and the impressions they drive with the web users who are most likely to book their travel for the routes, to better optimize load and yield.

Whether introducing new service to a community or promoting existing routes, our advertising is often supported by airport authorities and destination marketing organizations.

Whether introducing new service to a community or promoting existing routes, our advertising is often supported by cooperative marketing funding from airport authorities and destination marketing organizations.

We continue to see benefit from these cooperative marketing campaigns, as well as from high-profile sponsorships like Allegiant Stadium.

Underpinning our advertising efforts, high-profile sponsorships add credibility to our brand, drive new customer acquisition and enhance our national profile.

Our co-branded credit card incentivizes customers who fly more often to maximize their benefits with members-only promotions and travel perks like complimentary priority boarding.

Our co-brand credit card incentivizes customers who fly more often to maximize their benefits with members-only promotions and travel perks like complimentary priority boarding.

Cardholders are among our most engaged customers and book air ancillary and third-party products at a higher rate than other customers.

Our non-card loyalty program, Allways Rewards®, launched in August 2021, allows us to develop and maintain direct, long-term relationships with our customers.

As of December 31, 2023, we had more than 485 thousand co-brand cardholders.

For five years in a row, Allegiant's co-brand credit card has been voted as the No.

1 Best Airline Credit Card and our non-card loyalty program Allways Rewards® was recently rated as the number two Best Frequent Flyer Program in USA Today's 10 Best Loyalty/Rewards Readers' Choice Awards.

Allways Rewards®, with more than 17 million members at December 31, 2023, allows us to develop and maintain direct, long-term relationships with our customers.

Similar to our cardholder program, we provide greater value to our Allways members through personalized promotions and targeted communications which we expect will result in customer loyalty and increased revenues over time.

We believe our co-brand credit card and non-card loyalty program may be particularly attractive to our customers in the small to mid-sized cities served by us as there are few other airlines that operate service from those cities and as a result, our loyalty programs offer rewards these customers may highly value.

In addition, our co-brand credit card is designed for the less frequent leisure traveler, with status benefits – such as priority check-in, priority boarding and a free drink onboard – from day one of having the card.

The airline industry is highly competitive.

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The principal competitive factors in the airline industry are price, nonstop flights, schedule, customer service, routes served, types of aircraft, safety record and reputation, code-sharing relationships, and frequent flyer or loyalty programs.

Our competitors include legacy airlines, low cost carriers ("LCCs"), ultra-low cost carriers ("ULCC"), regional airlines, new entrant airlines, and other forms of transportation to a much lesser extent.

Our competitors include legacy airlines, low cost carriers ("LCCs"), ultra-low cost carriers ("ULCC"), regional airlines, new entrant airlines, and to a much lesser extent, other forms of transportation.

The legacy airlines are larger, have significantly greater financial resources, are better known, and have more established reputations than us.

In a limited number of cases, following our

entry into a market, competitors have chosen to add service, reduce their fares, or both.

In a limited number of cases, following our entry into a market, competitors have chosen to add service, reduce their fares, or both.

Competitors may also choose to enter after we have developed a market.

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We and Sun Country Airlines are the only mainline domestic scheduled carriers serving Phoenix Mesa Gateway Airport, Punta Gorda Airport, and St.

Petersburg-Clearwater Airport.

Petersburg-Clearwater International Airport.

Although no other mainline domestic scheduled carriers operate in these airports, most U.S.

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As a result, there is potential for increased competition on our routes.

As of February 1, 2023, we face mainline competition on approximately 22 percent of our operating and announced routes.

We overlap with Southwest Airlines on 73 routes, Frontier Airlines on 38 routes, Spirit Airlines on 32 routes, American Airlines on 19 routes, Delta Airlines on 13 routes, Breeze Airways on 14 routes, United Airlines on nine routes, JetBlue Airlines on six routes, Sun Country Airlines on five routes and Alaska Airlines on three routes.

In many cases, we face competition from more than one other airline on the same route, resulting in a total of 124 competitive routes as of that date.

These 124 routes represent 22 percent of the total number of routes we are serving as of February 1, 2023.

As of December 31, 2023, we face mainline non-stop competition on approximately 23 percent of our operating and announced routes.

We overlap with Southwest Airlines on 77 routes, Spirit Airlines on 34 routes, Frontier Airlines on 33 routes, American Airlines on 17 routes, Breeze Airways on 17 routes, Delta Airlines on 16 routes, United Airlines on nine routes, JetBlue Airways on seven routes, Sun Country Airlines on five routes and Alaska Airlines on three routes.

In many cases, we face competition from more than one other airline on the same route, resulting in a total of 127 competitive routes as of that date and 428 routes with no current nonstop competition.

We may also experience additional competition based on recent route announcements of other airlines.

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Environmental, Social and Governance (ESG)

We recognize our responsibility to reduce environmental impact from our operations.

As an integrated travel company with an expanding airline business, we believe that solidifying our commitment to ESG efforts is a natural integration into our long-term corporate strategy and will enable us to better serve our stakeholders.

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• Identify and prioritize relevant ESG topics through a materiality assessment.

These topics were addressed in our inaugural ESG report.

– Develop inaugural ESG report referencing the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks, which was issued in December 2022.

– Provide ongoing carbon emissions reporting of Scope 1, 2 and 3 greenhouse gas (GHG) emissions using Schneider Electric’s EcoStruxureTM Resource Advisor, the initial reporting having been included in our inaugural ESG report.

– Establish ESG targets and environmental target achievement plans.

We issued our inaugural sustainability report during 2022.

This comprehensive report outlines our disclosures pertaining to material topics identified by key stakeholders.

These topics are included in our ESG reports.

• Publish ESG reports referencing the Global Reporting Initiative (GRI).

• Provide ongoing carbon emissions reporting of Scope 1, 2 and 3 greenhouse gas (GHG) emissions.

• Establish ESG targets and environmental target achievement plans, which we published in our 2022 ESG report.

In 2023, we issued our second annual ESG report.

This comprehensive report outlines our disclosures pertaining to material topics identified by key stakeholders and establishes the following ESG Goals:

• Environmental:

Emissions - Reduce tank-to-wake GHG emissions by 10 percent per revenue ton kilometer (RTK) by the end of 2030 from 2023 base year.

(1) Safety - Earn the IATA Operational Safety Audit (IOSA) certification by the end of 2026.

(2) Diversity and Inclusion - Over the years, we have attracted and cultivated top talent that has led to our ability to consistently achieve industry-leading financial metrics.

We will continue to hire, develop and support the best team members by fostering a transparent, diverse and inclusive company culture.

• Governance:

(1) Customer Engagement - Maintain a controllable completion of at least 99.5 percent annually.

(2) Procurement - Adopt a responsible sourcing policy and embed the policy into existing governance and procurement management systems by the end of 2025

To determine material topics, a materiality assessment was conducted.

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Based on survey and interview results, we identified the following topics as material to Allegiant:

– Environmental:

Emissions, Energy, Waste and Hazardous Materials

Product Quality and Safety, Accident and Safety Management, Human Rights, Benefits and Work-Life Balance, Non-Discrimination, Employee Health and Safety, Employment, Diversity, Equity and Inclusion, Employee Training and Development, Labor Management, Local Job Creation, Response to COVID

– Governance:

Business Ethics and Integrity, Anti-Corruption, Competitive Behavior, Data Security, Customer Privacy

These material topics will guide the development of our ESG targets and annual ESG reports, including the inaugural ESG report published in December 2022.

• Environmental - Emissions, Energy, Waste and Hazardous Materials

• Social - Product Quality and Safety, Accident and Safety Management, Human Rights, Benefits and Work-Life Balance, Non-Discrimination, Employee Health and Safety, Employment, Diversity, Equity and Inclusion, Employee Training and Development, Labor Management, Local Job Creation

• Governance - Business Ethics and Integrity, Anti-Corruption, Competitive Behavior, Data Security, Customer Privacy

These material topics will continue to guide the development of our annual ESG reports.

In addition, we made recent investments in several ESG areas that will enable us to build a more resilient business, drive greater efficiencies and give back to our communities.

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Agreed to purchase 50 Boeing 737MAX aircraft, which are expected to burn up to 20 percent less fuel on a per passenger basis compared to certain of the older Airbus A320 Series aircraft in our fleet, with the option to purchase an additional 80 Boeing 737MAX aircraft.

Provided in-kind travel for Make-A-Wish kids and their families, and continued offering free office space in our Las Vegas headquarters to the nonprofit’s Southern Nevada Chapter.

Gifted hundreds of flight vouchers to local

elementary and high school teachers in partnership with The Smith Center for the Performing Arts’ The Heart of Education Awards program.

Opened three new aircraft bases, creating approximately 350 new jobs.

Separated the roles of the board and chief executive officer to uphold board independence.

Established the chief experience officer role to further foster a positive experience for customers and team members.

Implemented a new talent management system to improve tracking of diversity, equity, and inclusion recruitment efforts.

Provided in-kind travel for Make-A-Wish kids and their families, including our 2000th wish kid in the beginning of 2023.

Continued offering free office space in our Las Vegas headquarters to the Make-A-Wish Southern Nevada Chapter.

Pledged $1.0 million to Boys & Girls Clubs of America as discussed under "Community Involvement" below.

Gifted over $40,000 of flight vouchers to local elementary and high school teachers in partnership with The Smith Center for the Performing Arts’ The Heart of Education Awards program.

In 2022, we began efforts to implement multiple systems – including SAP Ariba, Trax and Fuel Plus – to manage and enhance our supply chain.

All three systems are procurement platforms that will enable better tracking of our supplier spend

and demographics to help us account for the items or services we procure.

In 2023, we launched SAP Ariba and Fuel Plus for enterprise-wide use.

We expect to launch Trax in 2024.

The aviation industry accounts for roughly two percent of global greenhouse gas emissions, almost all of which is attributable to aircraft fuel.

In 2013, we began the process of transitioning our fleet from a mixture of MD-80 aircraft and Boeing 757 aircraft to an all-Airbus fleet with the transition concluding in November 2018.

Throughout this transition period and continuing through 2022, we saw significant improvement in fuel efficiency.

During 2022, we consumed 219 million gallons of fuel averaging 84.3 available seat miles (ASMs) per gallon of fuel, a 34 percent improvement when compared to 2012.

Our agreement with Boeing and CFM International to purchase 50 Boeing 737MAX aircraft powered by LEAP 1-B engines, with deliveries beginning before the end of 2023, will provide us with new aircraft and more environmentally friendly engines.

Back in 2013, we began the process of transitioning our fleet from a mixture of MD-80 aircraft and Boeing 757 aircraft to an all-Airbus fleet with the transition concluding in November 2018.

During this period, we saw significant improvement in fuel efficiency.

During 2023, we consumed 225 million gallons of fuel averaging 83.4 ASMs per gallon of fuel, a 32 percent improvement when compared to 2012.

Our agreement with Boeing and CFM International to purchase 50 Boeing 737 MAX aircraft powered by LEAP 1-B engines, with deliveries beginning in 2024, will provide us with new aircraft and more environmentally friendly engines.

This aircraft is expected to burn up to 20 percent less fuel on a per passenger basis as compared to certain of the older Airbus A320 aircraft in our fleet.

As of December 31, 2023, the composition of our fleet included a mix of A319 and A320 aircraft with seat configurations ranging from 156 to 186 seats, some of which are fitted with fuel-efficient Sharklets.

As we grow the fleet over the next several years, the preference will be to continue adding 180-seat Sharklet-equipped Airbus aircraft in addition to our Boeing 737MAX order.

We expect to continue to see modest improvements in fuel efficiency due to further upgauging and greater use of Sharklet wingtips where possible.

Despite the significant fuel efficiencies gained over the past decade, we recognize we have a responsibility to do more.

We expect to see further fuel efficiency once the 737 MAX aircraft are added to our fleet.

Despite the significant fuel efficiencies gained over the past decade, we recognize we have a responsibility to do more, and one of our ESG goals is to reduce emissions through the end of this decade.

We have an internal Fuel Steering Committee that meets monthly to discuss various alternatives to conserve fuel.

In conjunction with the focused efforts and contributions of our pilots, dispatchers, and stations personnel, we have implemented several fuel conservation practices, which include the following:

Building on the dedicated efforts and teamwork of our pilots, dispatchers, and station personnel, we are actively advancing our fuel conservation practices across all flights, which include the following:

• Single engine taxi in and out, as time permits

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• Data collection by aircraft to identify performance deterioration and rectify where necessary

• Trial of several electric ground handling equipment

• Optimization of the amount of contingency and dispatch fuel

• Deployment of process to find optimal winds aloft while inflight

In addition to the above initiatives, the Fuel Steering Committee is currently researching sustainable aviation fuel to see if this could be a viable option on some of our routes.

In addition to the initiatives above, we are currently assessing sustainable aviation fuels as part of our sustainability strategy for reaching our emissions intensity reduction goal by the end of 2030 and offsetting requirements under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Unlike many air carriers focused on business travel, our strategy is to provide access to affordable travel for leisure travelers who highly value their vacations and are likely to take vacations in any economic environment.

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This practice of significantly reduced flying during the off-peak periods leads to consistently high load factors, and further enhances fuel efficiency.

During 2022, we consumed roughly 14.0 gallons of fuel per thousand revenue passenger miles compared with an Industry average of 16.0 gallons per thousand revenue passenger miles, or 12.8 percent more efficient on a revenue passenger mile basis.

We offer all nonstop flights, directly from 123 cities as of February 1, 2024, providing service in many markets abandoned or under-served by larger carriers.

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Prior to our initiation of service on these routes, many of these passengers either traveled by car, which is significantly less fuel efficient than air travel, or traveled by car to larger airports to fly, where higher cost connecting flights were the only option.

As fuel consumption is greatest during take-off, the ability to travel to the destination with a single take-off, as opposed to at least two take-offs on connecting flights, is more fuel efficient.

As fuel consumption is greatest during take-off,

the ability to travel to the destination with a single take-off, as opposed to at least two take-offs on connecting flights, is more fuel efficient.

Aircraft Fuel

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Significant increases in fuel costs could materially affect our operating results and profitability.

We have not used financial derivative products to hedge our exposure to fuel price volatility in over 15 years, nor do we have any plans to do so in the future.

We do not use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future.

Our largely variable cost structure allows us to adjust capacity accordingly based on the fuel environment.

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We employ experienced staff dedicated to cybersecurity and cyber risk analysis, process, and technology.

We continue to evaluate and proactively implement

new preventive and detective processes and technologies including forward looking threat intelligence and data centric security measures.

We continue to evaluate and proactively implement new preventive and detective processes and technologies including forward looking threat intelligence and data centric security measures.

One of our current and ongoing data security initiatives is the migration of critical business applications into the cloud infrastructure, which will allow us to take advantage of analytics and automation functionality.

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Protecting business data and our customers’ privacy is critical to our continued operations and we intend to continue investing resources in cyber security accordingly.

As of December 31, 2022, we employed 5,315 full-time equivalent employees.

For further information on our cybersecurity practices, see Item 1C - Cybersecurity.

As of December 31, 2023, the airline employed 5,643 full-time equivalent employees.

Full-time equivalent employees consisted of approximately 1,200 pilots, 1,550 flight attendants, 650 airport operations personnel, 750 maintenance personnel, 200 reservation agents, 50 flight dispatchers, and 1,200 management and other personnel.

Additionally, we employed 1,043 full-time equivalent employees at our newly opened Sunseeker Resort as of the same date.

Four groups of our employees – pilots, flight attendants, dispatchers, and maintenance technicians – are represented by labor organizations pursuant to the Railway Labor Act (“RLA”).

Those unions have negotiated separate collective bargaining agreements (“CBAs”) with us covering the rates of pay, rules, and working conditions that apply to those employees.

The CBAs covering our dispatchers and maintenance technicians both have five-year terms and do not become amendable until 2024 and 2026, respectively.

The CBAs covering our dispatchers and maintenance technicians do not become amendable until 2026 and 2028, respectively.

The CBAs covering our pilots and flight attendants became amendable in 2021 and 2022, respectively, and we are currently engaged in collective bargaining with the respective representatives of those employees for successor agreements.

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Only after this process has been exhausted may either party resort to self-help, such as a work stoppage by the union and its members.

In January 2023, we and the union that represents our pilots jointly requested the appointment of a mediator through the NMB.

The NMB has appointed a mediator and the parties are participating in mediated negotiations.

In 2023, we and the union that represents our pilots jointly requested the appointment of a mediator through the NMB.

The NMB has appointed a mediator and the parties continue to participate in mediated negotiations.

In May 2023, we reached a tentative agreement with the union representing our flight attendants, but the proposed agreement was rejected by this work group.

The parties have now resumed negotiations on the terms of a new contract.

To date, we have not experienced any work interruptions or stoppages from our non-unionized or unionized employee groups.

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Beginning in 2021, we have made significant investments to replace certain core proprietary systems with more advanced and integrated third party software solutions.

We have selected SAP as our accounting system, Trax as our Maintenance, Repair, and Overhaul (MRO) system, Navitaire as our passenger service system, and Navblue as our operations control and crew management systems.

We have selected SAP as our accounting system, Trax as our Maintenance, Repair, and Overhaul (MRO) system, and Navitaire as our passenger service system.

We are transitioning to new systems in other areas as well.

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Navitaire’ s passenger service system is expected to improve the way the airline manages customer interactions, reservations, and allows for dynamically priced ancillary products.

Navitaire is also expected to facilitate the initiation and operation of our joint alliance with VivaAerobus.

Navblue’s operations control and crew management system are expected to provide an integrated platform for managing flight schedules and crew assignments, enhancing our operational efficiency.

We expect that we will have spent more than $50.0 million in total to complete all of these system implementations.

We currently expect to switch over to SAP, Trax and Navitaire in 2023 with the Navblue cutover projected in 2024.

Navitaire is also expected to facilitate the initiation and operation of our planned joint alliance with VivaAerobus.

We successfully switched over to SAP and Navitaire in 2023, with the Trax cutover projected in 2024.

Human Capital

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We utilize competitive base salaries, discretionary performance-based bonuses, spot rewards, profit sharing, and equity as attraction and retention tools for our team members.

As of December 31, 2022, we had approximately 5,315 team members (including both full-time and part-time employees), of whom approximately 65 percent are in front line positions such as flight crew, mechanics or airport personnel.

As of December 31, 2023, the airline had approximately 6,060 team members (including both full-time and part-time employees), of whom approximately 73 percent are in front line positions such as flight crew, mechanics or airport personnel.

Additionally, we had over 1,100 full-time and part-time newly added Sunseeker Resort employees as of same date.

The safety and well-being of our team members is a top priority, and we believe each and every team member plays an essential role in creating a safe and healthy workplace.

Our health and safety policies and practices are intended to protect not only our team members, but also our customers in all things we do.

Our human capital focus has been externally recognized through Allegiant’s placement on Newsweek's America's Greatest Workplaces for Diversity 2023, Forbes top 500 Midsize Employers in 2023.

In addition, we received recognition in 2022 from Military Friendly as a "Top 10 Military Spouse Employer" and a "Silver Level Military Friendly Employer".

We were also recognized as a "Certified Most Loved Workplace" by Best Practice Institute, a Partner of Newsweek Magazine.

Our human capital focus has been externally recognized through Allegiant’s placement on Newsweek's America's Greatest Workplaces for Diversity 2024 and Most Responsible Companies 2024.

In addition, we received recognition in 2023 from VETS Indexes as a 4-Star Employer for Military hiring, Yello's Top 100 Internship Programs, and honored among Newsweek's America's Greatest Workplaces, Greatest Workplaces for Diversity, and Greatest Workplaces for Women, all for 2023.

We were also recognized in 2023 as one of Forbes Best Mid-Size Employers and Fortune's Most Innovative Companies.

Community Involvement

Allegiant has worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating a portion of proceeds from our in-flight Wingz Kids Snack Pack to the organization.

We have worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating a portion of proceeds from our in-flight Wingz Kids Snack Pack to the organization.

To kick off 2023, we celebrated a special milestone welcoming our 2000th wish kid on board an Allegiant flight.

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The site also serves as the host location for volunteer training, meetings and a place of support for families of children receiving wishes.

Allegiant is considered a Wish Champion by Make-A-Wish America, recognizing more than $1 million in annual contributions.

We are considered a Wish Champion by Make-A-Wish America, recognizing more than $1 million in annual contributions.

In May 2023, we pledged $1 million to Boys & Girls Clubs of America to develop and launch a new program seeking to inspire children to choose future careers in aviation.

The gift also includes a fundraising campaign to match donations made by individuals who make a new monthly pledge or increase their current amount.

The program launched with a tour of our West Coast training center and allowed Club youth to fly an Airbus simulator, learn about the features of an aircraft and ask pilots about their careers.

We have also been a national partner with The Arc, a nonprofit organization dedicated to advocacy on behalf of people with intellectual and developmental disabilities.

Allegiant partners with the organization to offer “Wings for All” educational programs in communities we serve, helping make travel accessible for individuals with autism and other developmental disabilities.

Allegiant supports Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences in under-served communities.

We partner with the organization to offer “Wings for All” educational programs in communities we serve, helping make travel accessible for individuals with autism and other developmental disabilities.

We support Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences in under-served communities.

We have partnered with local high schools and with Embry-Riddle Aeronautical University to offer Allegiant Careers in Aviation Scholarships, assisting students pursuing careers in the aviation industry.

We also partner with the American Red Cross, supporting disaster preparedness, relief and recovery efforts in communities we serve.

In this effort, we have provided no-cost supply flights and volunteer transport to support Red Cross hurricane recovery efforts in Florida and Puerto Rico.

In the wake of Hurricane Ian in 2022, Allegiant made a $100,000 donation to the organization to help restore critical resources in the community.

In addition, we sponsored a month-long nationwide blood drive to further support relief efforts.

During the COVID-19 pandemic and periodically, we provide additional support in our home community of Las Vegas, donating surplus in-flight food and beverage items such as juices, sodas and snacks to a local community food bank for distribution to families in need.

In this effort, we have provided no-cost supply flights and volunteer transport to support Red Cross hurricane recovery efforts in Florida and Puerto Rico in recent years.

In the wake of Hurricane Ian in 2022, we made a $100,000 donation to the organization to help restore critical resources in the community and we sponsored a month-long nationwide blood drive to further support relief efforts.

Periodically, we provide additional support in our home community of Las Vegas, donating surplus in-flight food and beverage items such as juices, sodas and snacks to a local community food bank for distribution to families in need.

We also provide $40,000 worth of flight vouchers on an annual basis to hundreds of local elementary and high school teachers as part of The Smith Center for the Performing Arts’ Heart of Education Awards program.

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We have a Federal Aviation Administration ("FAA") approved maintenance program, which is administered by our maintenance department headquartered in Las Vegas.

Technicians employed by us have appropriate experience and hold required licenses issued by the FAA.

Technicians employed by us have appropriate experience and hold required licenses

issued by the FAA.

We provide them with comprehensive training and maintain our aircraft in accordance with FAA regulations.

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Our management supervises all maintenance functions performed by our personnel and contractors employed by us, and by outside organizations.

In addition to the maintenance contractors we presently utilize, we believe there are sufficient qualified alternative providers of maintenance services that we can use to satisfy our ongoing maintenance needs.

VivaAerobus Alliance

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We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance.

We believe this alliance is consistent with the DOT's goal of providing maximum benefits to the public, as the alliance is expected to increase competition, reduce transborder fares and provide increased nonstop service for our consumers traveling between the US and Mexico.

The alliance is anticipated to add new transborder routes and nonstop competition where currently only connecting service is available.

More than 250 new potential nonstop route opportunities have been identified as part of the DOT application, though specific routes targeted for service wilI be announced at a later date, following the application's approval.

We and VivaAerobus currently expect to offer flights under the alliance beginning in the first half of 2023, pending governmental approval of the applications.

In addition, we have made an investment of $50.0 million in VivaAerobus, and our Executive Chairman and Chairman of the Board Maurice J.

Gallagher, Jr.

is expected to join the VivaAerobus board of directors.

We and VivaAerobus expect to offer flights under the alliance after governmental approval of the applications.

The DOT process has progressed substantially, but review is currently suspended pending the outcome of diplomatic engagement on broader treaty issues.

In addition, we have made an investment of $50.0 million in VivaAerobus.

Non-Airline Initiatives

Sunseeker Resort

We are developing Sunseeker Resort in Southwest Florida.

When completed, the Resort will feature approximately 500 hotel rooms, more than 180 suites, 55,000 square feet of meeting and conference space, 20 restaurants and bars, a rooftop pool and a ground level pool, a fitness center and spa and retail outlets along a harbor walk.

We also own a golf course, Aileron (formerly known as Kingsway Golf Course), which is a short drive from the Resort site and is considered to be an additional Resort amenity.

Construction on the Resort began in the first quarter of 2019 and was suspended in March 2020 so that we could conserve liquidity during the pandemic.

The golf course closed for renovation just before the pandemic and the renovation was suspended to conserve liquidity during the pandemic.

We recommenced construction on the Resort in August 2021 and commenced the golf course renovation in November 2021.

Although the Resort suffered damage from Hurricane Ian and construction was delayed as a result, we expect to open the Resort in late 2023.

We expect that the renovated golf course will open simultaneously with the Resort.

Sunseeker Resort at Charlotte Harbor opened in December 2023, culminating a multi-year vision of the company.

In 2017, we purchased more than 20 acres of land to build the Resort and announced our initial plans for the Resort.

We then hired experienced industry executives in 2018 and 2019 to plan for the operation of the Resort.

Construction began in March 2019.

Construction was delayed as a result of the pandemic, supply chain difficulties and then Hurricane Ian in 2022 and Hurricane Idalia in 2023.

Damage from the storms and other insured events exceeded $78 million and a portion of the insurance claims remains outstanding.

Construction was substantially completed in December 2023, and the Resort opened.

Certain assets did not open to the public from the beginning as two restaurants, one of the suite towers, the rooftop pool and certain retail establishments did not open until first quarter 2024.

The Resort consists of more than 500 hotel rooms, 189 one-, two- and three-bedroom suites with full kitchens and washer-dryers, 20 restaurants, including seven stand-alone restaurants, a food hall with 11 food and beverage concepts and two other poolside options.

The two-bedroom suites can be separately locked allowing for up to 785 keys on the property.

The Resort has 60,000 square feet of convention and meeting space which can accommodate up to 1,200 attendees.

The convention area includes innovative technology and features two waterfront ballrooms.

Accompanying the ballrooms are two executive boardrooms, 12 meeting rooms, and an ideation suite with separate breakout rooms.

We are actively selling to groups.

During the 2024 period ended February 15, 2024, we have hosted 16 groups.

The Resort also offers a state-of-the-art 7,100-square-foot fitness center and a full-service spa and salon as well as two pools including a 21,000-square-foot rooftop facility and a 117,000-square-foot ground-level experience.

In addition, the Aileron Golf Course is within a short distance from the Resort.

The golf course was renovated simultaneously with the construction of the Resort and features a more than 7,000-yard championship course.

The golf course is available only to guests at Sunseeker and through limited memberships.

The clubhouse was renovated at the same time and the 10,800 square foot facility offers a restaurant, bar, pro shop and event facilities.

During the construction of our Sunseeker Resort in Charlotte Harbor, Florida, we implemented design features and strategies to promote environmental efficiency and resilience.

We intend to keep ESG embedded within day-to-day operations and the guest experience.

As of February 1, 2024, the Resort and Aileron Golf Course employ more than 1,200 employees, making it one of the largest employers in Southwest Florida.

Other travel and leisure initiatives

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We maintain insurance policies we believe are of types customary in the airline industry and as required by the DOT, and are in amounts we believe to be adequate to protect us against material loss.

The policies principally provide coverage for public liability, war-risk, passenger liability, baggage and cargo liability, property damage, including coverages for loss or damage to our flight equipment and directors and officers, workers’ compensation.

The policies principally provide coverage for public liability, war-risk, passenger liability, baggage and cargo liability, property damage, including coverages for loss or damage to our flight equipment, directors and officers insurance and workers’ compensation.

We also maintain what we believe to be customary insurance on Sunseeker Resort and as required by the terms of our construction loan.

We expect the Sunseeker insurance to cover all damage incurred from Hurricane Ian.

There is no assurance, however, that the amount of insurance we carry will be sufficient to protect us from material loss in all cases.

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The joint application explains how the proposed Allegiant-Viva alliance is expected to benefit the traveling public (as well as Allegiant, Viva, and their respective employees) by bringing significant new competition and service options, including lower fares, additional capacity on existing routes, and increased overall transborder capacity in the form of nonstop flights on routes now served only via connecting service.

Although the DOT process has progressed substantially and is continuing, there is no assurance when or whether DOT will ultimately approve the agreement and grant antitrust immunity.

Over a period of 20 months the DOT’s review and analysis progressed substantially, but on July 31, 2023, the DOT suspended processing of the joint application pending resolution of an aviation trade dispute between the governments of Mexico and the United States that arose earlier in 2023.

The dispute remains unresolved and there is no assurance when or whether the DOT will ultimately approve the agreement and grant antitrust immunity.

We hold DOT certificates of public convenience and necessity authorizing us to engage in scheduled air transportation of passengers, property and mail within the United States, its territories and possessions, and between the United States and all countries that maintain a liberal aviation trade relationship with the United States (known as “open skies” countries).

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It also has the authority to issue regulations, including in cases of emergency, the authority to do so without advance notice, including issuance of a grounding order as occurred on September 11, 2001.

In addition, the TSA has authority over face mask requirements applicable to individuals across all U.S.

public transportation networks, including at airports and onboard commercial aircraft which were applicable during the pandemic.

Aviation Taxes and Fees .

The authority of the federal government to collect most types of aviation taxes, which are used, in part, to finance the nation’s airport and air traffic control systems, and the authority of the FAA to expend those funds must be periodically reauthorized by the U.S.

On October 5, 2018, the FAA Reauthorization Act of 2018 was signed into law extending certain commercial aviation taxes (known generally as Federal Excise Taxes or "FET") through September 30, 2023.

A five-year reauthorization extending certain commercial aviation taxes (known generally as Federal Excise Taxes or "FET") expired September 30, 2023;

a short-term extension is in effect through March 31, 2024.

Legislation to reauthorize the FAA through September 30, 2028 is pending in the U.S.

All carriers are required to collect these taxes from passengers and pass them through to the federal government.

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These fees do not need to be reauthorized, although their amounts may be revised periodically.

Particularly since FAA reauthorization expires September 30, 2023, during the current year Congress may consider legislation that could increase the amount of FET and/or one or more of the other federally imposed or approved fees identified above.

In 2024 or thereafter, Congress may consider legislation that could increase the amount of FET and/or one or more of the other federally imposed or approved fees identified above.

Increasing the overall price charged to passengers could lessen demand for air travel.

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This finding may be a precursor to increased EPA regulation of commercial aircraft emissions in the United States, as has taken effect for operations within the European Union under EU legislation.

Binding international measures adopted under the auspices of the International Civil Aviation Organization (“ICAO”), a specialized agency of the United Nations, are scheduled to become effective over the next several years, with the pilot phase having begun in 2021.

In January 2021 the EPA adopted regulations setting emissions standards equivalent to ICAO’s for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.

In January 2021 the EPA adopted regulations setting emissions standards for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.

Similarly, in December 2022, the EPA adopted particulate matter emission standards and test procedures for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.

These new standards and procedures harmonize with ICAO requirements.

At present, the aircraft we operate are not affected by these standards.

In February 2024, the FAA adopted regulations implementing these EPA requirements.

These new EPA and FAA standards and procedures harmonize with International Civil Aviation Organization ("ICAO") requirements.

The aircraft we currently operate are not affected by these standards, and those we have on order would be affected only if manufactured after December 31, 2027.

In response to growing concerns over GHG emissions from the aviation sector, particularly carbon emissions and their role in climate change, the ICAO introduced a market-based mechanism, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), in 2016.

CORSIA aims to stabilize carbon emissions from international flights, setting a target for carbon-neutral growth starting in 2021.

Airlines are expected to offset any growth in emissions beyond the set baseline through approved carbon-offsetting practices or by using sustainable aviation fuels (SAF).

The initial CORSIA baseline was determined by the average emissions from 2019 and 2020.

However, the COVID-19 pandemic's dramatic effect on international travel led to a recalibration in June 2020, eliminating 2020 from the baseline calculation for CORSIA's initial phase (2021-2023).

A revised baseline pegged at 85% of 2019's emissions levels, was introduced in 2022 for application from 2024 to 2035.

CORSIA is being implemented in stages, beginning with a pilot phase that ran from 2021 through 2023.

The pilot phase was followed by a first phase of the program, which began January 1, 2024.

The second phase of the program will begin in 2027.

While participation in the early and pilot stages is optional, the second phase mandates involvement from certain countries, including the U.S.

However, U.S.

legislation mandating participation in CORSIA is not yet in effect and is pending.

We anticipate that in 2024 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial.

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These restrictions can include limiting nighttime operations, directing specific aircraft operational procedures during takeoff and initial climb, and limiting the overall number of flights at an airport.

None of the airports we serve currently impose such restrictions on the number of flights or hours of operation that have a meaningful impact on our operations.

It is possible one or more such airports may impose additional future restrictions with or without advance notice, which may impact our operations.

Few of the airports we serve currently impose such restrictions on the number of flights or hours of operation that have a meaningful impact on our operations.

It is possible one or more such airports or others may impose additional or future restrictions with or without advance notice, which may impact our operations.

Foreign Ownership .

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This means we must be under the actual control of U.S.

citizens and we must satisfy certain other requirements, including that our president/chief executive officer and at least two-thirds of our board of directors and other managing officers are U.S.

citizens and we must satisfy certain other requirements, including that our president and at least two-thirds of our board of directors and other managing officers are U.S.

citizens, and that not more than 25 percent of our voting stock is owned or controlled by non-U.S.

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We must comply with the laws, rules and regulations of each country to, from, or over which we operate.

Our proposed U.S.-Mexico alliance with Viva, described above, received approval by Mexico’s Federal Economic Competition Commission (COFECE) in October 2022 for a six-month period, with a six-month extension available.

Our proposed U.S.-Mexico alliance with Viva, described above, received approval by Mexico’s Federal Economic Competition Commission (COFECE) in October 2022;

however, that approval will require renewal (which is not assured) in view of the suspension of DOT processing described above.

International flights are also subject to U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business